Tanzanians no longer view IMF as an enemy – Meghji

Speaking at an African Finance Ministers press conference in Washington DC this past Saturday, the Finance Minister, Hon. Mrs. Zakia Meghji stated that unlike in the past, Tanzanians these days no longer view IMF as an enemy, but rather as an ally in their quest for development.

The Minister said the following in her opening remarks:

Now, on the role of the IMF, if I can just talk quickly, we can say that Tanzania’s relationship with the IMF has gone through swings since we joined the Fund in the 1960s, actually, right after independence. In short, one can say that Tanzania has moved from viewing the Fund as an enemy – previously, when you would talk about the IMF, people on the street would be very negative —through a period which could be characterized as a “reluctant reformer” to the current status now, of a mature stabilizer in implementing an IMF-supported program under the Policy Support Instrument”.

When I said that presently, the Fund is looked at as an “ally,” I was comparing it, of course, with a number of years before. And as I said, our contract with the Fund goes way back into the sixties. I remember that time when Tanzania decided to be a member of the Fund, the demonstrations that took place amongst students at the universities–I was in the university at that time. So the way that the Fund was portrayed was as an institution from outside that wanted to tell the Tanzanian people what to do. And having come from an independence period in the sixties, people saw the Fund as another colonial thing.

But things have changed, as I said, and also the policies, which of course, to the Fund and to the leadership, it was important that we have these policies in order to reduce poverty and to have economic growth. So people didn’t like some of them. For example, the question of the cash budget–so there was a situation whereby people would spend money without planning, and at the end of the day, there were problems, of course. But then, later on, people started understanding that actually, what the Fund was talking about was economic growth–poverty reduction and economic growth–put it that way. And, as I pointed out, a number of reforms therefore had to take place. Initially, they were saying that there would be no changes, but when the reforms brought a lot of changes in Tanzania, the people now say that the Fund is an ally”.

While it is true that over the years Tanzania has graduated in her relationship with IMF to the point of currently operating under a PSI and thus driving its own development agenda; and while its true that IMF policies have evolved over the years to a degree where they are more favorable to the LDCs, the argument of whether IMF and World Bank past policies had done more harm than good will continue unabated. Whether majority of Tanzanians view the IMF and World Bank as “allies” is also up for debate since many more still feel that the improved macro-economic environment is largely on paper; that improvements can be seen but it hasn’t significantly changed their daily lives.

I would broadly agree with the minister’s statement, about TZ viewing the IMF as an ally of late. Why this is so can perhaps be attributed to a number of factors.

Could it be because we’ve failed to properly implement our own ujamaa policy and take care of ourselves since uhuru? Or could it be because the IMF policies have evolve favourably towards us? Or could it be because we have our backs to wall as it were and nowhere to turn?

I thought Minister Meghji’s comments were very subjective as well. There is no doubt that our macro-economic stature has improved significantly and a more conducive business environment is growing. And by all means, these are positive steps and we should pat ourselves on the back for this.

However, I think only few Tanzanians have made progress as a result of these policies. It is debatable as to what extent a common man in Tanzania has benefited from the very auster policies IMF prescribed in the 1980s and early 90s. Generally speaking, the tide of IMF policies is yet to lift all boats. More citizens need to benefit before we can make the claim that IMF is no longer an enemy.

Initial IMF policies were painful to implement and I think they have left a negative mark in areas where it will take a long time to heal or reverse. Take for example the cut on govt agricultural subsidies, social services and programs like free health care and UPE (universal primary education) that went along in those days. Not having UPE for a while has affected a big generation of citizens who couldn’t go to school and this effect of having an illiterate generation will linger for sometime. Privatization has been implemented with some positive successes. However, it was done in such a way that citizens were not heavily involved. The end result is an economy increasingly dominated by foreign corporations.
And its not as if we couldn’t predict these outcomes! For some reason, our governments just simply couldn’t stand up to the IMF and World Bank and say these policies were fundamentally flawed. We just went along with them, afraid not to offend our masters, despite intense opposition to such cutback among the general citizenry.

Since we are now at a stage whereby we run our own development agenda and IMF is just watching our back, I hope we will put the emphisis on overturning the negative effects of previous austerity measures demanded by the Bretton Woods.